Why should you have a good credit score

Why should you have a good credit score?

Your credit report and credit score are two of the most vital aspects of your financial health. Understanding your credit score will go a long way to financial freedom. Have you ever wondered why your credit score can change from one month to the next and what determines this dynamic score?

A credit score is a calculated number that credit providers use to help determine the creditworthiness of a consumer. It is one of several pieces of information used to assess the risk of repayment in the event of credit being granted.  A good credit score reduces the risk that a lender has to take when willing to provide a loan or credit card. A score above 720 will qualify for a home loan whereas a score of 680 will only allow for a credit card or personal loan.

What constitutes a low score;

  1. Late payments
  2. Outstanding debt
  3. Length of credit history
  4. Types of credit
  5. Number of enquiries

How to avoid a low score;

  1. Always pay your bills and invoices on time or earlier if possible.
  2. Monitor credit balances and avoid maxing out credit cards.
  3. Check your credit report as often as possible and dispute any errors or report any suspicious activity that you may notice on your report immediately.

It is also possible that credit providers sometimes submit inaccurate information to the credit bureaus which negatively impacts your score.   As a consumer, it is in your best interest to know your score and understand if and why it is being negatively impacted. Regular examination of one’s credit report will enable you to detect that all the information is accurate. Credit reports can be given to consumers for free once a year, use this opportunity to examine your credit report and score. Contact one of the following credit bureaus for your report;

  • Compuscan: 0861 514 131
  • Experian: 0861 105 665
  • TransUnion: 0861 886 466
  • XDS : 011 645 9100

Read other interesting blog articles here: Take the risk and invest in your future – try GradUcare! or Latest statistics reveal how Millennials manage their finances

Source: Credit Health

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